DAP's Petaling Jaya Utara MP Tony Pua accused Prime Minister Najib Abdul Razak of using misleading statistics a paint a positive picture of the country's fiscal targets.
This was after Najib, who is also finance minister, declared yesterday that the country was on track to reduce its deficit from 3.4 percent of the gross domestic product (GDP) to 3.2 percent, with the overall debt capped at 55 percent.
"Najib should stop providing false appearances and assurances on the federal government budget using highly misleading statistics.
"None of the above statistics stated by the finance minister is any where near accurate due to various creative manipulations of government expenditure, especially over the past five years," Pua (photo) said in a statement today.
He explained that the government had adopted a new strategy within this period to hide its debt.
"We already know that much of the government’s expenditure are via newly-created Ministry of Finance subsidiaries that undertook RM157.5 billion worth of loans guaranteed by the Federal Government as at Dec 31, 2014.
"If the above contingent liabilities figure were to be included in the official federal government debt, it would add up to nearly 70 percent of our GDP.
"Hence it is a mockery that Najib continues to insist that the federal government debt remains “capped” within 55 percent of GDP," he said.
‘Off-balance sheet’ expenditures not included
Furthermore, Pua said these contingent liabilities did not include "off-balance sheet" expenditures.
Pua pointed out that Najib, in a parliamentary reply on June 8, admitted there are nine government-owned companies through the Finance Ministry Incorporated (FMI) which had off-balance sheet expenditures borne by the government.
"For example, one of these wholly-owned FMI subsidiaries, Pembinaan PFI Sdn Bhd (PPFI), has borrowed and spent RM27.9 billion on various projects.
"However, none of these projects or expenditures was ever reflected in any of the budgets tabled over the past five years.
"The result is a significantly understated budget deficit," he said.
Ultimately, Pua said, the government had resorted to shifting expenditures to "off-balance sheet" in order to hide them from the annual budget figures.
"The finance minister also admitted that as a result of these off-balance sheet expenditures, 'the annual payment for this between 2015 and 2020 is between RM4.76 billion and RM11.62 billion'.
"This represents the commitment on future government expenditure without the debt or liabilities reflected the budget or balance sheet today.
"All of the above mean that the official debt of the government is severely understated to keep the figures below the 55 percent debt limit," he said.
Pua added that this practice of hiding debt had effectively rendered the fiscal figures meaningless.
"It is hence disingenuous for the prime minister to continue using these figures to give the façade that “the government remains committed to strengthening public finance," he said.
Pua called on Najib to exercise transparency in off-balance sheet projects and open it to parliamentary scrutiny, if the prime minister was serious about his commitment to strengthen public finances.